Mortgage Applications Slide to Lowest Level So Far in 2007

U.S. mortgage applications declined by more than 5 percent last week, hitting their lowest levels this year, even as home mortgage rates fell, an industry trade group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and traditional home purchase loan transactions, slid 5.2 percent to 606.6 for the week.

Borrowing costs on 30-year fixed-rate mortgages, excluding points, averaged 6.19 percent, down 0.05 percent from the previous week. Interest rates were slightly below year-ago levels of 6.22 percent.

The MBA’s seasonally adjusted purchase index fell 4.8 percent to 381.4, its lowest since the week ending October 27, 2006, when it stood at 375.6.

The index of mortgage application activity was also significantly below its year-ago levels of 408.7.

The purchase index is considered a timely gauge of U.S. home sales, which floundered in 2006 after five straight years of record growth.

With more home loans out of reach for many buyers due to staggering housing costs, 2007 may shape up to be another unspectacular year for the industry.

The group’s seasonally adjusted index of mortgage refinancing applications slid 5.4 percent to 1,921.1. A year earlier the index stood at 1,571.4.

Overall, the mortgage refinance share of applications decreased to 44.9 percent from 46.1 percent the previous week.

Elsewhere in mortgage rates, the ixed 15-year mortgage loan averaged 5.88 percent, down from 5.94 percent. Interest rates on one-year, adjustable-rate mortgages, or ARMs, increased to 5.81 percent from 5.80 percent.

The ARM share of activity remained more or less unchanged at 21.2 percent.

SOURCE: MarketWatch